Sanlam reports another set of solid financial results

Sanlam attributed the strong performance to sustained focus on the Group’s strategy, the strength of its brand combined with a well-diversified business, an increased distribution footprint and a strong focus on client service.

 

New business volumes grew by 36% to R185 billion and the Group’s operating earnings growth of 35% compared to the same period last year exceeded expectations. This is attributable to organic growth (71% contribution to growth) and acquisitions made with discretionary capital (contributed 29% of earnings growth).

 

The Group announced a normal dividend of 200 cents per share, up 21% compared to the same period last year.

 

Other highlights from the 2013 financial results were as follows:

 

• Net result from financial services per share increased by 34%

• Net fund inflows of R32 billion

• Normalised headline earnings per share up 35%

• Return on Group Equity Value per share of 17%

 

Commenting on the results, Sanlam Group Chief Executive, Dr Johan van Zyl said all of the Group’s businesses with the exception of Santam, performed well and contributed to the strong results. Sanlam Personal Finance, Sanlam Investments and Sanlam Emerging Markets reported exceptional growth in operating profit. Santam was affected by a succession of costly natural disasters and excessive vehicle repair costs which were exacerbated by a volatile currency.

 

"We are pleased with our performance across the Group in 2013 and we believe that key to our success is the sustained and strong focus on our strategy, client centricity across all our businesses and our commitment to growing value for our shareholders.”

 

The Group continued to grow its footprint and pursued value-accretive opportunities with the aim of further diversifying its revenue streams. It finalised five acquisitions, including, among others, a 49% stake in Malaysian general insurer, Pacific & Orient Insurance Co. Berhad; a stake in NICO General Insurance Company’s businesses in Malawi, Zambia and Uganda; and an additional direct stake in Shriram Transport Finance Company.

 

As at 31 December 2013, Sanlam had unallocated discretionary capital of R4 billion and the company’s preference remains to invest discretionary capital in value-adding growth opportunities, with specific focus on identified growth markets.

 

A large portion of the discretionary capital would be utilised on transactions likely to be finalised in the near term. A number of potential further opportunities are under consideration and most of the remaining available discretionary capital would be utilised for these opportunities within a reasonable time frame.

 

"While we are satisfied with our performance in the past year, we anticipate that the challenging economic conditions will persist in the year ahead. However, we are confident that our continued focus on our strategy and the requisite depth of skills and experience we have in our people will support us in withstanding these challenges,” Dr Van Zyl said.

 

The Group also announced that in December 2013, the initial 10-year contractual period of its broad-based Black Economic Empowerment transaction with Ubuntu-Botho ended, with a final total of 66,5 million Deferred shares qualifying for conversion to ordinary shares.

 

The deal, one of the most far-reaching black empowerment transactions, created value of about R15 billion after the settlement of all debt and interest on the debt, making it arguably one of the most successful transactions of its kind in South African history. Agreement has also been reached to extend the partnership with Ubuntu-Botho into the future.

 

"We are proud of the success of this transaction which we believe is a model for true broad-based economic empowerment and which has enabled us to secure significant long term growth opportunities for Sanlam as well as its shareholders,” said Dr Van Zyl.

 

Click here to view the full details of the results for the year ended 31 December 2013.